So many big movers today. Look at shares of Spotify taking a dive after the music streamer posted a loss and weaker guidance for the current quarter.

And though the company said AI has helped with user engagement, it isn't bolstering the ad business enough and could also pose a threat.

Julia Borsen digs into all that in today's tech check. Julia, so what's the story here? Well, Sarah, Spotify's declining ad revenue is the company's biggest disappointment.

So now Spotify needs to deploy AI to drive ad growth. Just as meta and alphabet have used AI

to improve ad creation, ad targeting, and ad measurement. Spotify is now under pressure to deploy

AI to accelerate its ad revenue, as it also watches the threat of AI to intellectual property

concerns. AI is proving to be a double-edged sword for the company. Now, Spotify is saying on the call,

quote, we're creating a stronger, more sustainable ads business

by accelerating our automation efforts.

AI has helped drive Spotify's usage.

And the quarter it rolled out a request feature

for his AI DJ, saying engagement with that tool

has roughly doubled in the past year,

and that its AI playlists are now a valuable new feature.

Now while Spotify turns to AI to power its business, it's also facing a growing threat

from the technology with the rise of AI-generated music going viral, driving down revenue to major record labels amid claims that AI has copied their artists and is infringing on their copyright.

Now, this poses legal risks to not only Spotify, but also to Apple, YouTube, and Amazon's

music services. Now, Velvet Sundown is an AI-generated musical artist that's recently gained

traction and now has 1.4 million monthly listeners on Spotify.

Now, it does not violate Spotify's policies,

but it has drawn calls for clear AI labels.

The Recording Industry Association telling us,

...